I have acquired over 10 businesses and sold two. And in
this video I'm going to share with you some of my best tips to
reduce customer churn when you have a transition of ownership
in a new business venture. Thanks for joining if you're new
to the channel, my name is Pete Moriarty and we help business
owners with systems people and technology and help them build
more successful businesses. And I've been in business for over
10 years myself started a business in my teenage years and
grew and scaled that organization to be now the
number one partner for Google Small Business in both Australia
and New Zealand. And what we love doing is helping businesses
with Google workspace helping them have more productive teams,
and helping business owners create more freedom in their
life. So whether that's more time or money, more location,
flexibility, whatever works for you, we're here to help you out.
And personally, I love seeing business owners buy other
businesses to accelerate their growth. This is a strategy that
we have used in our business. As I said in the intro, I've done
more than 10 transactions on the buying side of businesses. And
we have used that to create tremendous growth in our
business, and lots of value for our team, for our customers, and
for the marketplace as well. And so I'm going to share some of my
tips in this video, it's a little bit different to what I
would normally be sharing on the channel. But if you like this
content, please be sure to give me a thumbs up and drop a
comment down below. And let me know if there's anything else
that you'd like me to cover that's a little bit out of the
ordinary, or what we'd normally cover on this channel. So I'm
going to share with you some of the tips that we have learned
and gathered over many different businesses that we've bought and
acquired and, you know, brought different sets of customers into
our database and into our family of customers. Now, when we made
our first acquisition of another business, it actually had a
pretty disastrous effect, I had 30% of the customers either
disappear, the revenue wasn't realized because of accounting
errors, or just were unresponsive and you know,
straight up, left the business and disappeared from all site or
communication. And that was a pretty big blow to our business
because I'd spent money. And it was harder and money actually
taking those customers in to do the deal. But I found out that
when all of those customers no longer wanted to be customers of
the business, well, then I was going to actually be out of
pocket. And now that I think about it, it wasn't even my
money, I borrowed the money to be able to do that deal. And so
these tips are going to be about how you can dramatically reduce
churn when you have a specific point of taking on a new
business. But if you haven't just acquired a business, you
could apply these to reducing churn in general in your
business. And you could also apply some of the same
psychological thinking to your existing customer base if you're
introducing a new product if you're introducing a change, or
just in general. So I hope no matter what situation you're in,
this is useful for you. So my first tip, when you have a new
customer base that you are taking on, is to recognize that
any change is effectively a decision point, we haven't run a
subscription business. So this is very relevant for us. For
many people, if they're paying for web hosting, or they're
paying for a Google subscription, either annually or
month to month, they're going to have a recurring bill that's
coming from the business. And effectively each year or each
month, there is a decision point am I going to renew again, now
with something like web hosting or email, it's pretty obvious
that people aren't going to just you know, wake up suddenly and
decide they're not going to need email or a website hosting
anymore. And so there's less risk of people canceling in the
kind of business that I run. Yet, when you make a transition
in business ownership, that is a trigger for a decision point.
And then decision the person is making is not do I need this
service anymore, the decision they're making is do I want to
do business with the new owners. And so recognizing that that's
what's going through the mind of every single customer, that you
are actually transitioning, or every single customer that you
have just acquired in your new business venture is very
important, because that's the absolute base ground level that
you need to work against. And a challenge there I say work
against is because you actually need to work on an automatic
bias that they are going to happen that automatic bias is
going to be that Hey, someone new is coming in. And it's kind
of like your local cafe, getting new owners,
if you don't get the same coffee or you don't get the same
sandwiches or croissants, then you're probably going to go
somewhere else pretty quickly. Because all loyalty is probably
going to be lost if new owners come in, and they're not
delivering in the same way. Now, the easiest antidote for this
particular challenge is to remember that each customer
thinks individually, they don't think on the whole. Now you
would probably be you know, automatically thinking of the
whole group of customers. And there might be 10 There might be
hundreds of customers, but each individual customer all they
care about is me they only care about themselves. And so when
you recognize that each customer thinks about themselves
individually, you can use that to frame the way that you
approach any change management or any communications in the
business. So what you want to be thinking about is, okay, well,
each individual customer needs care and love. What can I do for
each individual customer to feel care and love throughout this
process, whether there is a change or not? What can you do
to address each customer individually. And one of the
little tricks that I like to play on myself, it's
a little mind trick is anytime that I'm writing communication
to my customer base, whether this is for general marketing,
or around the area of a particular incident, or a change
management or an acquisition is I will fire up an email and I'll
actually say dear, and somebody's actual name. Now I
use the name Clive, who's one of my customers from very, very
long time ago. And I always think about Clive when I go to
write that email to my customers, because I want it to
feel like I'm writing that to them personally, not Dear
customers, because when we write a Dear customers email, it could
come across as very corporate, and can come across as a little
inhuman. But when we're thinking about an individual and we're
acting on looking after an individual, then it's going to
have a very different effect. Now, this is not just about
writing emails, this is about everything that you do, what
will be the effect of any changes that you make what will
be the effect of any systems that you change? What will be
the effect of any policies that you make on the individual. So
while we're talking about the individual, let's talk about how
we actually help the individuals inside the business, we want to
give them love, love, love, love, love. And I say that five
times, because we want to give about five times the ratio of
love to asking for anything. And that's very important, its
customer wants to feel like they are a priority. And importantly,
we want to be giving before we are asking, now, if you've taken
over a business and you want to change the billing system.
Imagine if you send an email out on day one and said, Hey, we're
the new owners the business, by the way, you need to go and sign
up for this new billing system, or you need to punch your credit
card into this new system. All of a sudden, you are asking them
to do something, and you're asking them to take time out of
their day to actually help you without having given them
anything first. And so love, love, love, love, love five
loves in ratio. For each one thing that you asked for. Now,
it doesn't have to be anything big one love might be giving
them a great welcome email. One Love might be recording a video
not necessarily for every single customer individually, but
recording a video and sharing that with customers. You know,
sharing the values, the reason you bought the business and your
purpose and intention behind where you would like to take the
business. Next up, you want to make sure that you are actually
helping to make their lives as easy as possible. And if you are
bringing along perks, if you're bringing along things that are
going to help the business owner actually do more in their
business, if you're going to do something that's going to give
them a benefit, well, you want to tell the customer about that,
and tell them quickly and upfront. Now, just imagine if
your local cafe came to you and said, hey, the owners have
changed here. But for all of our loyal customers, you're gonna
get a free coffee and a croissant, all of a sudden,
you're gonna go well, you know what these, these new owners
have actually given me something in advance that I didn't ask
for. And you're gonna feel a little bit indebted to them.
Because of the rules of reciprocity and the Principles
of Psychology, that you'll probably be more likely to
actually give them a go, because they have given something to you
first. So that's a principle that we're working with here is
that principle of reciprocity. If we give, give, give, give,
give love, then when we do ask for something, it's more likely
than on the balance of everything and the exchange,
they're going to feel like they can trust you. And they're more
likely to give in return, the next principle is an important
one. And anytime there's a changing of the guard, there's
going to be that little fear in the back of their head, that the
new owners won't care about them, or the new owners are
going to be worse. Again, it's just a standard bias that exists
anytime there's change that this change might be worse, and I may
need to protect myself. And so the antidote to that is to be
different, and be better. And again, tell people about it.
When you want to take on a new business, it's important for you
to be a point of differentiation and hopefully exceed what the
previous business owners did with that customer base. And
what we've found is with customers, when they find that
there's a new owner coming into a business, they start to get
the ideas of like corporate takeovers of service going
downhill, they might have some resentment about the previous
owners leaving the business or cashing out or whatever the
circumstances are of the previous owners, owners exiting,
people can start to get funny ideas in their mind. And so when
you aim to be different, and aim to be better, what that does is
when you approach your customers, and when you're
building relationships with them, they're going to get an
idea that you're here to help maintain their relationship and
that that relationship is really important to you, when you put
in the effort to be better than the previous experience that
they had. And even though you've got a bit of an uphill battle
against their already established bias, well, you've
hopefully got a good chance of retaining that customer if you
can prove to them that they have a better service with you, my
next step is to make sure you have a clear communications
plan. And that plan should be communicating to each of your
customers, why you're going to be better how you're going to be
better, what you're going to be doing, what things they're
getting as a benefit of this change, because remember, people
just think about what's in it for me, right. And that clear
communications plan should be outlining quickly and
reasonably, exactly what's happening. And it should be
really clear as well, you shouldn't want to be, you know,
interrupting people's days just because you have made a change
in the business. But wherever possible, you want to be given
the benefits with that. And some of those communications will be
in varying levels of engagement with your different customers.
If you're acquiring a large customer base, obviously, you
can't pick up the phone and call every one of those customers,
but you might call the top 10 largest customers or the top 10
most important customers and build a relationship with them
manually. Even better, if you've bought a business and the old
business owner is outgoing, would actually be to have an
introduction done to those key customers from all of the
stakeholders who are involved in so if that's the previous
business owner, or previous account manager, having some
kind of handover happen, where a customer is introduced, is going
to have a much more likely chance of that customer being
retained and staying a customer of your business. Now, in the
inevitable case that some customers will leave or choose
to no longer remain a part of the business, it's really
important to some exit interviews. And that means
reaching out to the customers and having a chat to them. Hey,
why did you choose not to continue to give this business
your patronage? You know, what
is the reason for you moving along from this business? You
know, is there anything that we didn't quite meet few
expectations wise? Or was there another reason that you decided
to move on. And this is going to help you not only to retain
customers in the future in that business. But of course, for any
future transactions as well. It's been said many times that
what gets measured, gets managed. And so it's very
important for you to measure your results in any acquisition
or business transaction. Now we like to measure churn in our
business. And when we acquire a new customer base, we look at
the churn metrics to see whether or not we've done a good job. As
I said, at the start of the video, my absolute disaster
acquisition, the first one ever did had 30% of customers walk
away. But nowadays, because we've got really great at the
process, we've implemented all of these tips, and we absolutely
love them each time we take on a business. Well, we tend to
retain 95 to 98% of customers, anytime we do a business
transaction. And most of those that don't come across the
customers that were either planning to cancel their service
anyway, or sometimes even had forgotten that the service was
still running. And then they tend to cancel out at that
point. And I'm really glad to say that that is a very
profitable exercise for our business. Now that we've
implemented each one of these strategies, that means that when
we acquire a business, we're going to retain as much profit
and as much result as possible. And we're going to make sure
that the customers who are involved in our business having
a good experience as well remember that not only do you
want to measure the churn, but you want to measure the return
on investment as well. So you want to over time, whether it's
12 months, 24 or 36 months record and review how much
revenue you've generated from each one of those customers what
the profit has been, and what the price was that you paid for
the business or the customer base that you acquired. And that
will give you a good idea of the return on investment for future
transactions. I hope this has been helpful. If you're
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